There may be fewer software developers in India than previously thought

By BBC News Online's North America Business Reporter, David Schepp

Shares in software firm AremisSoft have fallen over 7% in trading in New York after allegations surfaced that the company has misrepresented the number of software developers it employs in India.

In addition, the company appears to have overstated the value of software sold to the Indian Army, according to a report in Tuesday editions of the New York Times.

It is yet another in a string of controversies that have plagued the company in recent weeks.

Questions surrounding the company and its operations have halved the value of the company's stock from its peak of $28 in January.

Missing employees

AremisSoft claims in filings with the US Securities and Exchange Commission that it employs about 325 employees at its software development and support facilities in New Delhi and Bangalore.

In its most recent annual filing with the regulatory body, the New York Times reported, the company has increased to 323 from 115 the number of staff in its offices within India.

AremisSoft Controversies

March: Company claims value of army contracts at $6.25m

March: Indian officials deny existence of contracts

May: Discrepancies surface over Bulgarian contract

June: AremisSoft accused of overstating number of software developers

But according to India-based employees, including one who said her title was director of human resources, the firm only employs about 100 people in all of India.

The India-based staff also denied that the company even had a New Delhi operation, the New York Times said.

In March, AremisSoft said it had signed contracts with the Indian Army valued at $6.25m (£4.43m), which Indian officials have denied.

In addition, a company executive in India told the New York Times that the firm has actually sold only $70,000 worth of software to the army and has no guarantees of any future orders.

Aremissoft responds

In a written statement, AremisSoft accused the New York Times of having "inaccurately characterised aspects of the company's business".

AremisSoft also said it employs 315 people in 8 centres throughout India, including "50 employees based in India but temporarily assigned overseas in Bulgaria".

The company said its contracts with the Indian government were valued, "as previously announced," at $500,000, and went on to criticise the New York Times for failing to contact the company in adequate time for it to respond to the allegations.

Bulgarian row

The dispute over employee counts and military software contracts is the latest in controversies that have plagued AremisSoft.

Last month, the company rejected concerns over the value of a contract with the Bulgarian National Insurance Fund, which the company valued at $37.2m (£26.4m).

Shares of the company fell in subsequent days, after documents filed by the company last year with the SEC indicated the value of the contract at less than $4m.

A week later, the company found itself mired in a class-action lawsuit brought on behalf of investors over the Bulgarian contract, claiming AremisSoft misrepresented its business and operations.

UK roots

With no shortage of qualified workers and lower business costs, India is viewed by a number of information-technology (IT) companies the perfect place to set up shop.

But while some firms have their headquarters in India and export to places such as the UK and the US, where demand for software is strong, AremisSoft instead is based in Woking, England.

The firm first set up shop in New Delhi, India, in 1986, but moved its headquarters to the UK in the 1990s, the country where it is generating most of its revenue.

Despite being headquartered in the UK, AremisSoft, which makes software for accounting, customer service and other functions, can reduce its costs by hiring software developers in its Indian offices, where wages and other business costs are far lower.